BAC Options

Discussion in 'Options' started by FX_Capitalist, Apr 21, 2009.

  1. Thinking of purchasing WBA AU $37.5 Strike Call, lmt. $.07 X20-30 contracts.

    I'm playing this due to a post stress test market interpretation/reaction. The way I see it is the sooner BAC hits 11 again or higher the sooner i can B/E and profit. Since It's all time value based there's little to play with and day by day that passes by the farther away b/e falls away from my inital price of initiating the position. So what I'm betting on is that it moves past 11 or higher, the sooner the better and or higher IV to increase the price of the options, then dump them when price stalls. I wouldn't be in this position 3 months before expiration unless it's trading even close to the strike (Highly improbable) If I'm completely wrong max loss is about 200-300. Risk worth it due to a possibility of higher returns. We'll see.

    Any thoughts?

    Please do share. I like speculating on massive OTM option buying, if anyone has any tips on this kind of option trading I'm all ears.

    Best Regards.
  2. I think inevitably it is a good idea to bet along side the U.S. gov't, regardless of whether things are ever fixed for "real"--all that matters is if public perception of the situation briefly improves, and you can bank in. If you figure a whole 6 week rally was set off by a single "leaked" memo by Vikram and cooked bank books, I'd say the probability is ultimately very high for this kind of reversal. If you wait a few days you will probably get a better price, however, as it looks like today is going to be another beating on the financials.
  3. up 40% on 20 WBA AG contracts =D

    New max loss is $150~ got inside bid at around .05, so I got it better than expected.
  4. First, posting the symbol of an option is ridiculous. Post 'BAC Jan10 37.5 call.' Then everyone understands.

    Your strike is 37.5. If the stock pops on good stress test news, do you have an idea what is likely to happen to the implied volatility?

    Speculating is gambling. Gambling is taking a chance for the opportunity to win. Do you truly believe that if the stock moves to 11 the 9-month 37 call is going to move much higher?

    If you do, then go for it. But I think your chances of a minor success are no better than 1%

  5. Thanks for the constructive insight. Well appreciated. We all trade our own ways. Good Day.
  6. Do you honestly believe that BAC will go close to $40 within less than a year?

    Also, do you know that you can spread to reduce cost of your options?
  7. No of course not. I'm just looking to make the spread and sell at maybe 20 cents. Like I said BAC to 40 ish is slim to none.
  8. shbhanda


    i actually think bac has a decent shot to hit above 25 in the coming year in a best case scenario for the u.s./world economies (v turnaround, housing bottoms and starts to rise, financials take advantage of advantageous borrowing conditions).

    especially if toxic debt is dealt with, bac picked up two companies that could make them a ton of money if the economy has a sharp turnaround - which i think probably has about a 15% chance of happening.

    In that scenario i honestly wouldn't be surprised to see bac hit $40.

    good luck.
  9. Go out of the money 6-9 months out not beyond $10.00 strike and you will thank yourself in the morning.